Page 86 - GSTL_26th March 2020_Vol 34_Part 4

596 GST LAW TIMES [ Vol. 34
rational connection with or relevant bearing on the formation of the opinion. Ra-
tional connection postulates that there must be a direct nexus or live link be-
tween the protection of interest and available property which might not be avail-
able at the time of recovery of taxes after final adjudication of the dispute. The
opinion must be formed in good faith and should not be a mere pretence. Courts
are entitled to determine whether the formation of opinion is arbitrary, capri-
cious or whimsical. Expression ‘necessary’ must also be taken care of. From the
order and record, it must come out that actually it was necessary to take drastic
action of attachment.
8. We find it appropriate to refer to similar provisions of provisional at-
tachment under Section 226(3) and 281B of the Income-tax Act, 1961 and availa-
ble case law before adverting to the provisions of Section 83 of CGST Act, 2017
and facts of the instant case.
8.1 As per Section 226(3) of Income-tax Act, 1961 an Assessing Officer
or Tax Recovery Officer may require any person from whom money is due or
may become due to the assessee or any person who holds or may subsequently
hold money for or on account of the assessee to pay to the Assessing Officer or
Tax Recovery Officer.
8.2 As per Section 281B of Income-tax Act, 1961 the assessing officer
during the pendency of any proceeding for the assessment of any income or for
the assessment or reassessment of any income which has escaped assessment, for
the purpose of protecting the interest of revenue may by order in writing provi-
sionally attached any property. The Assessing Officer must be of the opinion that
it is necessary to do so.
8.3 While dealing with power of attachment of property under Section
281B of Income-tax Act, Bombay High Court in the case of Gandhi Trading v. As-
sistant Commissioner of Income Tax (1999) 239 ITR 337 (Bom.) in Para 7 has ob-
served as under :
“We have considered the suggestion of the Joint Commissioner of Income
Tax. We are, however, not impressed by the same. Attachment has been
made in this case under Section 281B of the Act which provides for provi-
sional attachment only to protect the revenue in certain cases. This Section
reads as follows :
“281B. Provisional attachment to protect revenue in certain cases. -
(1) Where, during the pendency of any proceeding for the assessment
of any income or for the assessment or reassessment of any income
which has escaped assessment, the Assessing Officer is of the opinion
that for the purpose of protecting the interests of the revenue it is neces-
sary so to do, he may, with the previous approval of the Principal
Chief Commissioner or Chief Commissioner, Principal Commissioner
or Commissioner, Principal Director General or Director General or
Principal Director or Director, by order in writing, attach provisional-
ly any property belonging to the assessee in the manner provided in
the Second Schedule.
It is clear from a plain reading of the above Section that it is intended to
empower the Assessing Officer to make a provisional attachment of any
property of the assessee during the pendency of any proceedings or as-
sessment or reassessment of any income, even though there is no demand
outstanding against the assessee, if he is of the opinion that it is necessary
to do so to protect the interests of the Revenue. To ensure that this power is
not misused, a number of safeguards have been provided in the Section it-
self. It is not necessary for us, at this stage, to examine the same. One thing
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